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Can I use an equity loan to pay off my mortgage?

Q: My home is valued at $195,000. I owe $127,000 on the mortgage. I want a 10 year equity loan to pay off the mortgage. Can I find lenders to do this?

A: Certainly! However, you'll find that rates for fixed-rate Home Equity Loans are much high than those on first mortgages -- about 7.26% right now. A short-term first mortgage -- 15 years or less -- can be had at about 4%. Shop around; it shouldn't be too hard to find a mortgage lender to offer you a ten-year first mortgage, but if you cannot find one, consider a 15-year term, then simply make extra payments to get the ten-year term you want.

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